Have you ever been in a situation where you find something you really want to buy but cannot afford it just yet? If it were the old days, you probably will save up for it first then go back and buy it as soon as you racked up enough cash. But that’s not the way things happen anymore. Now, many people given that same situation will pay for it using a credit card instantly, thinking they have at least a month to save for it.

Credit cards are not a recent occurrence, and in fact, credit cards have been in existence for more than half a century.

Credit cards have numerous features that make trading easier and faster. Sad to say, however, some of the best features that make a credit card an enticing tool of trade can very well be the same features that cause the high amount of debt in the modern society.

According to a recent survey conducted by a website named CardHub, credit card debt in 2011 amounted to more than $47 billion, an estimated 424% increase as compared to the same period the previous year. Below are some prominent features of credit cards and how they can be disadvantageous for you.

Convenient to use

Credit cards are very convenient to use. You can take it anywhere and buy just about anything within your credit limit. It does not require numerous trips to the bank to withdraw money nor do you need to bring a lot of cash with you. Although, it is really convenient to use credit cards, these conveniences can lure consumers to buy more, and in some cases much more than they can actually afford.

Interest free grace period

A typical credit card allows you to pay within the grace period of up to one month without interest. It gives consumers more confidence in their ability to purchase an item. But a consumer needs to keep in mind that the interest free feature of credit cards is applicable STRICTLY within the grace period only. As soon as the grace period ends, interest will now start adding up. According to FINRA Investor Education Foundation in a study of credit card users conducted in 2009, 36% of respondents don’t know the interest rate of the credit card they often use.

Security

Credit cards offer more security than cash. It allows you to pay for huge price tags without having to bring the actual large amount in cash, but the security that credit cards provide may as well be considered a false sense of security. People tend to feel that they can afford more than they actually can.

Cash advance

Credit cards offer cash advances. They act like an ATM machine except the money you are withdrawing is a loan and not actually debited from an existing bank account. This can be an additional amount to be paid in the future. This can bury an indebted person in more debt.

Bankruptcy due to credit card debt

Bankruptcy due to credit card debt is very real. It can happen to anyone who thinks that paying just the minimum amount due or delaying payments for whatever reason is not harmful as long as you pay for it in the future after you saved enough. However, this is far from the truth. Interest will pile up alongside the new purchases and possible penalties. Adding everything up for a long time can render an individual bankrupt. Some individuals even resort to purposely filing bankruptcy just to avoid paying off their staggering credit card debt. However, these people need to realize that bankruptcy will ruin their credit report for years to come.

Credit cards are like the opium in trade. One can get addicted to its use without feeling the downsides at first. Enjoying the highs of acquiring goods and services without feeling the burden of paying for it immediately can blind people to the facts and responsibilities of maintaining a credit card. The lure of increased purchasing power can be exhilarating and can easily get out of hand if handled by someone who has weak control.

Can you safely say that you are a responsible credit card user? Do you spend within your affordable limit? Have you ever let your desire to buy something get the better of you?

YFS is owner and author of Your Finances Simplified. He was born and raised in West Philadelphia and is now a financial adviser, IT contractor, landlord, and treasurer of a non-profit. He created his blog partly due to his desire to help people with their finances.